MEREDITH — Senior Housing of New Hampshire, inc., owners and operators of the Meredith Bay Colony Club has abandoned its quest for a charitable exemption from property taxation by agreeing to make an annual payment in lieu of taxes (PILOT) to the town in a settlement that brought lengthy legal proceedings to a close.

Acknowledging that the uncertain outcome of the litigation posed risks to both parties, the town and company settled on the PILOT, which is calculated by applying town and county tax rates to the assessed value of the property. The property is currently assessed at $13,145,500, which at the 2013 town and county tax rates of $4.55 and $1.51 would amount to a payment of $79,661.73. The agreement begins in 2014 and runs for five years, when it can be extended, though the town is entitled not to renew it.

In 2010, the town denied the request of Senior Housing of New Hampshire to exempt the private Meredith Bay Colony Club, a senior housing community of 44 assisted living and 41 independent living units on 10.16 acres at 21 Mile Point Drive, from property taxes. The company appeal the denial to the Belknap County Superior Court, where a bench trial was forestalled by the settlement.To qualify for a charitable exemption a corporation must be "established and administered for the purpose of performing, and obligated, by its charter or otherwise, to perform some service of public good or welfare advancing the spiritual, physical, intellectual, social or economic well-being of the general public or a substantial and indefinite segment of the general public."

Senior Housing of New Hampshire contended it was entitled to a charitable exemption because it provides subsidies of between $100,000 and $220,000 against the membership fees of five residents of independent living units and that its annual rates and entrance fees are less than market rates and fees. The town questioned whether loans bearing interest rates between 7 percent and 11 percent qualified as subsidies and challenged the company's calculation of market rates and fees. The town also questioned whether the Meredith Bay Bay Colony Club was established and operated for a charitable purpose.